Abstract
This study aims to identify the most influential factors affecting the efficiency of digital financial services in Iraq within the context of financial inclusion. It employs the Reciprocal LASSO method as a modern statistical tool for variable selection. The analysis is based on annual data from 2010 to 2020, obtained from the Financial Access Survey (FAS) published by the International Monetary Fund. Nine financial inclusion indicators were used as explanatory variables. The model results revealed that variables related to the actual use of digital technologies such as the number of online or mobile banking users, the number of debit cards, and point-of-sale (POS) terminals have the greatest impact on service efficiency. In contrast, traditional infrastructure variables like the number of bank branches showed no significant effect.These findings highlight the importance of focusing on user behavior and the adoption of digital tools rather than relying solely on quantitative expansion of banking infrastructure. The study recommends enhancing digital financial literacy, improving digital infrastructure, and providing a flexible and secure regulatory environment to boost service efficiency and achieve effective financial inclusion.
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